Insurers group responds to Hood
DES PLAINES, Ill. - Mississippi Attorney General Jim Hood claims he is attempting to protect insurance consumers with the legislation he recently crafted and is pushing on the state, but one industry head says the measures would have the opposite effect.
June Holmes, the interim chief executive officer of Property Casualty Insurers Association of America, recently had some harsh words for Hood, who proposed legislation last week that would thwart State Farm Insurance Co.'s plan to stop issuing new homeowners and commercial policies in Mississippi. The company cited the state's unpredictable legal and political climate.
Holmes said that while Hood's plan is publicly designed to protect consumers, it tinkers too much with the idea of an open market.
"Unfortunately, state Attorney General Jim Hood's threats to introduce legislation that would force insurance companies to write policies in Mississippi only undermine efforts to assure that all consumers in the state have access to homeowners insurance protection that fits their personal needs and budgets," Holmes said.
"At a time when responsible state leaders are taking measured steps to rebuild a competitive market, the attorney general is proposing a draconian approach that will reduce consumer choice for both homeowners and auto insurance policies and, while such a measure may be attractive for short-term political gain, will do nothing to make insurance more affordable or available to the citizens Mr. Hood represents."
Hood sued five insurance companies, including State Farm, over an alleged lack of coverage in the weeks following Hurricane Katrina.
One part of a proposed two-part settlement with State Farm, the largest homeowners insurer in the state, was rejected by U.S. District Judge L.T. Senter, who has scheduled a Feb. 28 meeting with the two sides to iron out the problems. Last week, State Farm decided it will not write any new policies in the state.
Then on Friday, Hood announced he will introduce legislation designed to keep the company modeled after recently passed measures in Florida. The plan would require any insurance company that writes automobile policies to offer commercial and homeowners policies.
During the press conference, Hood compared State Farm to a "cult," indicated that it is attempting to intimidate Senter, called the company's practices "decadent" and again requested Congress create national insurance reform.
Holmes feels Hood should not be looking at Florida for answers to his own problems.
"Over 80 percent of the insured property in Florida is located along the Gulf and Atlantic Coasts and the total value of insured property there is nearly $2 trillion and growing. Mississippi, on the other hand, has far less exposure -- both in terms of the amount and value of property -- subject to catastrophic storm risk," Holmes said.
"As a result, state lawmakers can consider much more measured options, such as enactment and enforcement of a statewide building code that will reduce losses from future storms; market assistance programs; wind pools; and state catastrophic risk reinsurance programs. These options will allow lawmakers to address the needs of coastal residents without unfairly transferring the cost to lower risk consumers."
PCI is composed of more than 1,000 member companies that write over $194 billion in annual premium, 40 percent of the nation's property/casualty insurance.
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Mississippi Attorney General
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